Liam Byrne - Opposition Work and Pensions spokesman, UK HARDtalk

powerful storms to hit the region in 30 years. Those are the headlines.

Now, time for HARDtalk. Welcome 30 years. Those are the headlines.

HARDtalk. The battle lines for the next British general election are

being drawn up. With the economy growing after years of stagnation,

David Cameron's conservatives are claiming vindication for their stiff

dose of fiscal austerity. The Labour conference has to convince the party

that the centre—left has the better pass for a quick recovery. My guest

Welcome to the programme. Three years in opposition. Soul—searching

believes that the inside of the and plenty of reviewing. Why do

believes that the inside of the party is puzzled about the direction

the Labour Party wants to go in party is puzzled about the direction

this anaemic recovery... They are been setting the weather. We have a

this anaemic recovery... They are not exactly boasting so much as

economy, which is that for the first time in a long time, we have signs

OECD says we will grow by 1.5% year. We are not disputing growth,

boast about this recovery when this but it is rich for the government to

boast about this recovery when this is the slowest recovery on record,

for most people, this economy does not feel like it is fixed. For most

getting harder than ever. The reason not feel like it is fixed. For most

getting harder than ever. The reason for that is simple. In 38 of the 39

months that David Cameron has been Prime Minister, prices have been

rising much faster than wages. We will get to the economic argument in

a moment, but I want to start with just looking at what the Labour

Party is doing to define itself today. John Prescott, a senior

minister in the Blairite and Brown government, says we are failing

minister in the Blairite and Brown William Labour need radical change

to our policies and our delivery so that people know what we are is

standing for —— we in the Labour Party. We are still... You had three

years to think about it. We are Party. We are still... You had three

years away from manifesto time. First, we got back in touch with the

people who left us at the last election. The last election was

people who left us at the last terrible result for the Labour

Party. Two thirds of working people said that Labour was not a party in

touch with them. For the party of working people, that was a heck

touch with them. For the party of an achievement. Ed Miliband has

turned those figures around. With respect, he has not. The figures for

him are terrible. He has some of the lowest approval ratings for any

opposition leader in modern times lowest approval ratings for any

opposition leader in modern times assessment of who do you touch ——

trust to manage the economy, George assessment of who do you touch ——

farther ahead than Ed Miliband and Osborne and David Miliband, out

farther ahead than Ed Miliband and Ed Balls. You could have said much

Thatcher in the past. Ed Miliband has defined this living standards

crisis and this is what is going to define the next election. People

at the last election? The answer for question. Am I better off than I was

at the last election? The answer for the vast majority of people in this

phrase. Surely the weather is set by the Conservative description for

managing the economy, which is that in the end, the main priority is

drawing down debt, getting rid of deficit that the state has been

running. They are course over the next four or five years to deliver a

balanced budget and your party seems to have bought into that new weather

Chancellor Ed Balls now says he to have bought into that new weather

apply iron discipline to the public finances. He is effectively buying

into the austerity programme of finances. He is effectively buying

Conservatives. Labour has always responsibility. The deficit was

brought down dramatically before the financial crash hits. I have to

interject. You are the one who left that infamous note when Labour left

office that you were afraid there traditional note left by every chief

secretary since the 1930s. I don't think so. The political record is

there. Do you regret that? It has dogged you every day since you wrote

it. Even yesterday, we had Nick Clegg talking about that note. It

was a sign to the British people is an old Treasury position. ——

tradition. Did it demonstrate an arrogance that you did not care

you accept that Ed Balls and Ed mess? It was nothing more than an

you accept that Ed Balls and Ed Miliband have now bought into the

increase in a two—day spending but by the government? We have said

increase in a two—day spending but what we have also said is that we

should listen to the wise heads what we have also said is that we

the IMF, who say that what Britain needs right now is for us to ring

investment to the order of about £10 billion. That would make a great

difference to the situation in this construction workers back into work.

left—wing headbangers. They are sensible, reasonable people, and

they are sending the people of Britain a clear message that we

believe the Chancellor should listen phrases... Iron discipline, working

within the spending forecast... phrases... Iron discipline, working

that is the message Ed Balls is sending, how does that fit with

that is the message Ed Balls is capital expenditure programme you

are talking about? Is Labour talking have said... Argue?We have been

saying, trust us, we will borrow more in the future? We will send out

those public spending plans closer to the election but if we were in

power today, we would say that we should listen to the IMF, bring

forward capital investment to get the economy growing faster, and

forward capital investment to get challenge, this is the challenge for

most people in Britain today, is that because there is a little work

to go around, wages are taking a hammering. The average family in

Britain today makes exactly the hammering. The average family in

as they did back in 2000. People are £1500 per year poorer than they

as they did back in 2000. People are at the last election. You say you

cannot make borrowing commitments generally, and this gets to the

radical and different agenda from the Conservative party, are you

taxes to ensure that you can deliver the Conservative party, are you

taxes to ensure that you can deliver responsibly? Then act we have said

86% this year while small companies tax? You will be taxed higher under

86% this year while small companies struggle to get credit and 1 million

young people are locked out of work. It back but that is still not going

to get the money that you need for this capital expenditure. But with

respect, we say that a tax on bank young people locked out of work

respect, we say that a tax on bank a job. Second, we say there should

be a mansion tax on property is worth more than £2 million, because

that will give us the money to introduce a 10p rate of tax for

that will give us the money to low—paid. Put that together with a

serious plan to take on the energy companies, a plan to bring forward

different set of choices. What about higher tax rates for the rich, for

example? The Liberal Democrats, supposedly a centre ground party in

their description, is talking about that. You are the left of centre

Labour Party. Many people around the world are going to start wondering

when the Labour Party is going to redistribution message, part of

which would be significantly more tax on the wealthy in this country?

see the public finances picture election? Everytime George Osborne

see the public finances picture government is borrowing billions of

pounds much more than they forecast. government is borrowing billions of

pounds much more than they forecast. Who knows what that picture will

look like once we get to 2014 or Who knows what that picture will

us. We know that the picture will 2015. It would be irresponsible

us. We know that the picture will not be pretty. Absolutely. And so 18

your particular area, Work and not be pretty. Absolutely. And so 18

your particular area, Work and Pensions. You have written and been

also Australia... And in many of involved in some interesting studies

also Australia... And in many of those countries, the left has not

performed very well recently. You those countries, the left has not

performed very well recently. You say part of the reason is that those

in the squeezed middle are now very redistribution and when it comes to

welfare, they are very wary on wasteful public spending. Is that

your way of saying that Labour welfare, benefits, pensions? That

there must be a new way? Yes.What is it? First, we have to set a cap

on the annual welfare budget. The government has already done that.

They have not done it yet. They government has already done that.

still in consultation. But we know they will do it. They say that if

you are without a job, a family without a job, you cannot have an

overall package of benefits that amounts to more than the average

wage, £26,000 per year. Do you support that? We believe there

should be a benefit cap but we want Conservatives are happy for people

They have set no cap on the amount of time someone should be able to

spend out of work. We don't think that's right. We don't believe

people should be able to languish on the dole for more than two years. We

say there should be a limit on the dole of two years. That is it. And

then no more unemployment benefit? Exactly. And then what? We will

then no more unemployment benefit? sure there is a supply of jobs

available for those who have been out of work for two years and we can

do that I changing the pension tax rates of the very rich. But the

message should be simple. You cannot live a life on welfare. Once you

I am afraid you have to get a job. have been out of work for two years,

I am afraid you have to get a job. We will invest in your chances

who think that you talk way too you have to take them. You are

who think that you talk way too tough and give out the wrong message

benefits but I very interested to about labour and Liberal's policies

benefits but I very interested to hear you say that you accept the

welfare in the UK. Would you reverse hear you say that you accept the

welfare in the UK. Would you reverse it or not? We think there should not

government has done? We believe independent panel of experts to

government has done? We believe at the right cap in London and

second—guess what conclusion they will make. Just on one more issue,

some call it the better in tax. will make. Just on one more issue,

a penalty for those who live in social housing and have what is

regarded as a spare bedroom. Very definitely guarantee to reverse

regarded as a spare bedroom. Very We think this is an iniquitous,

vicious attacks. You have condemned it, but would you reverse it? Then

we think it should be dropped and at the manifesto, we will set out how

we will deal with it when in office. watching that this tax will be

eliminated under do? We have said we will set out our plans for the

election. We think it should be dropped now. Look, people are being

pushed into extraordinary debt by this. The figures are out now that

show one third of people hit by this. The figures are out now that

bedroom tax are already in arrears. That is after just five months.

18 months? I have to ask you a on earth is it going to be like

Benefits and tax credits account for Benefits and tax credits account for

and would if we cut the benefits ballooned and went up to 13% by

and would if we cut the benefits bill? Yes, we think that what's

and would if we cut the benefits strike could soak —— Social Security

to come down for a simple reason. Welfare went up during the crash.

That's what happens in a recession. You need those automatic stabilisers

to work. The problem is, it's not That is not sustainable. What is the

target for labour? To cut eye how much, in percentage terms, when

target for labour? To cut eye how are in power? We will have to look

at the state of the books. Who knows what's going to happen? We have

at the state of the books. Who knows put the Social Security system back

believe you do that by getting people back into jobs. I'm getting

the sense that there will be real cuts, real—time cuts, the status quo

can't be allowed to be returned cuts, real—time cuts, the status quo

Let's get some important principles. Any benefit system in the Western

world has to address these issues. Universal benefits, is labour now

actively seeking to change those universal benefits? By that I mean,

automatically entitled, whatever their status or wealth, to a free

bus pass, free TV license, a winter fuel are allowance. This is a great

question. Every generation has to strike a balance between universal

benefits and targeted benefits. This is the end of the era of universal

benefits. There will be some that state. Why?Was the national health

service is quite important. Child and effort for those who need it is

quite important. Education systems universal benefits, what's the logic

about... Even pensions. It needs to that says, actually, we have to

about... Even pensions. It needs to be changed. Let me turn this around.

restore. Restoring child benefits be changed. Let me turn this around.

for those who are wealthier, we can't restore that. We fuel payments

for the wealthy of pensioners, we can't restore that. We fuel payments

for the wealthy of pensioners, we believe they should go. Free bus

But some things should be more believe they should go. Free bus

But some things should be more universal. So, labour introduced

automatic second private pensions for people. The government has

carved 1 million people out of that system, mainly low—paid women. We

think that should be reversed. Secondly, this is something I feel

passionate about, the way we treat scandal. People who are vulnerable

are trapped in a system that denies them personal safety, access to

are trapped in a system that denies and sometimes a home and care.

That's wrong. That's why we say and sometimes a home and care.

should look at ideas, as they have in Australia, for comprehensive

disability insurance, that brings together social care and the back to

work system and a new universal system. Got that. A quick final

thought on what you say is a radical Looking at one stat, 47% of European

exports to China right now confident Germany. How will Britain change

that? I've been obsessed with this question. How will Britain pay its

way in a world that's been dominated by Asia for some time? I've come out

of my research as an optimist. Britain has huge potential but we

need to get our act together. That's what Germany has done over the last

labour's commitment to raising the minimum wage, taxing financial

services in a whole new way, the overall envelope which suggests

labour costs would rise under the Labor Party, is that really going to

Britain won't win a race to the bottom. Many factory workers are

paid 90% less than British workers. But we have seen an ultra efficient

simple. What you see is Germany But we have seen an ultra efficient

simple. What you see is Germany becoming very high value as an

China, for example, is to become partners in innovation. One wants

have some great universities. We become a leading science power.

in the Pacific century, perhaps should be bringing those things

in the Pacific century, perhaps globalisation and want it to stop.

They want to stop the bus and get consumer boom in Britain over the

next ten years. Our investment is still bad. The only way I think

next ten years. Our investment is can grow in the years to come is by

becoming a mighty trading nation again. That, I'm afraid, means

you more friends further away. China's consumer market may grow by

There is no other market in the world that will grow at that speed.

We need to get in there. Final thought. Is a part of this, part of

the UK succeeding in exploiting thought. Is a part of this, part of

is on offer in Asia, is the UK working presumably with Europe.

Absolutely. Look at what's happening in the UK today. The Conservative

in our referendum, the Lib Dems in the UK today. The Conservative

patently moving in that direction. The Labor Party may go into the

election as the only party telling the British public but you cannot

have a vote on the state of the European Union. Everyone I spoke to

when I was writing my book said European Union. Everyone I spoke to

we should be using our membership to the world's greatest free—trade

blood to battle open the doors exporters. —— club. Instead, we

blood to battle open the doors destroying our political capital in

Europe by asking for a referendum. Last question. Your message is,

it. We are saying that now, when we know it so important we stay in

need so much growth, there is a chance to restore our power as a

mighty trading nation, we should be harnessing the EU or that political

purpose. Instead, we are destroying what political capital we have got

and destroying our influence. We have to end there. Liam Byrne,